Canadian Distributor Sales Rise Slightly in May

Source: Statistics Canada
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Following April's sharp decline, Canadian wholesale sales posted a modest rebound in May with most sectors registering gains.


Overall sales rose  ; 0.6% to  ; $43.1  ; billion in May, offsetting some of April's large drop (-3.0%). Five of the seven wholesale sectors reported higher sales in May, with the largest gains observed in the machinery and electronic equipment (+2.1%) and other products" (+1.9%) sectors. More modest rises were recorded by wholesalers of building materials, personal and household goods and automotive products.

These gains were partially offset by lower sales in the food, beverages and tobacco products sector, which posted its first decline of  ; 2007, and the farm products sector.
Taking price fluctuations into account, the volume of sales in constant dollars rose  ; 1.4  ; % in May to  ; $44.5  ; billion.

Machinery and electronic equipment sector recoups most of April loss
Sales in the machinery and electronic equipment sector rose  ; 2.1% in May to  ; $9.1  ; billion, helping to recoup most of the decline (-2.9%) registered in April. This was the seventh increase in eight months for this sector, although the year-over-year monthly growth rates in the first five months of  ; 2007  ; have eased somewhat from the double-digit levels recorded during the same period in  ; 2006.

Two of the three trade groups within this sector posted higher sales in May, with the largest increase (+5.1%) coming from the office and professional equipment trade group. This was the third increase in four months for this trade group, which accounts for around a fifth of all sales in the machinery and electronic equipment sector.

The other gain occurred in the machinery and equipment trade group (+2.3%), which only last month recorded its largest monthly decline (-6.0%) in two years. Sales in this trade group have been somewhat volatile of late, as April's reversal followed a large increase in March.

The only negative note came in the computer and other electronic equipment trade group, which posted a slight decline (-0.3%). However, this was only the second decline in eight months for this group, which last year recorded its strongest annual growth since  ; 1999.

Sales of "other products" rise after large decline in April
Sales of "other products" (primarily agricultural products, chemicals, recycled materials and paper products) rose  ; 1.9% to  ; $5.2  ; billion in May, partially offsetting the large drop (-4.9%) in April.


While the sales trend for this sector has eased somewhat over the past three months, sales in the first five months of  ; 2007  ; are still well ahead of those in the same period in  ; 2006, the result of stronger sales of agricultural supplies (primarily fertilizers) and recycled materials.

Farm products sector hit by weaker sales of live animals
Wholesalers of farm products posted their largest monthly decline since May  ; 2006  ; as sales tumbled  ; 7.0% in May to  ; $452  ; million. This was the second consecutive drop in sales for this sector, reversing all of the increases registered in the first three months of the  ; 2007.

As was the case in April, the decrease was largely attributable to lower sales of live animals, which make up almost half of all sales in this sector. Most of these animals are exported to the United States. In May, exports of live animals fell (-6.6%) for the second consecutive month following a similar decline (-6.5%) in April.

Despite these recent declines, exports of live animals have been gradually increasing as more countries ratify agreements to accept Canadian cattle. According to the latest international trade data, exports of live animals in the first five months of  ;

2007  ; were around  ; 15% higher than in the same period of  ; 2006.

Food products sector ends a string of four consecutive increases
After starting the year with four consecutive monthly increases, the food, beverages and tobacco products sector registered its first decline in  ; 2007  ; as sales fell  ; 0.8% to  ; $7.8  ; billion. The drop was entirely due to lower sales of food products (-1.5%), as sales of alcohol and tobacco rose (+7.4%) in May.

Gains concentrated in Central Canada
Seven of the provinces and territories recorded higher sales in May, with much of the strength concentrated in Central Canada.

Quebec's wholesalers made up some of the ground lost in April, thanks to higher sales of building materials, automotive products and personal and household goods. After falling  ; 2.5% in April, sales rose  ; 1.7% in May to  ; $8.3  ; billion.

Sales in Ontario rose  ; 0.8% to  ; $21.6  ; billion, primarily as a result of higher sales in the machinery and electronic equipment sector. The automotive products sector, which had been the major contributor to the large decline (-2.5%) seen in the province in April, registered only a modest increase in May.

In British Columbia, sales rose for the fifth time in six months, up  ; 0.9% in May to  ; $4.3  ; billion. The province's largest wholesale sector, building materials, was behind most of the gain in May.

The picture was less positive for the rest of Western Canada, as wholesalers in all three Prairie Provinces reported lower sales in May. This was the second straight monthly decline in overall sales for the Prairie Provinces.

Following a major decline (-7.4%) in April, sales in Alberta continued to retreat in May, dropping a further  ; 1.1% to  ; $5.1  ; billion. Weaker sales of automotive products (mainly heavy trucks) contributed to much of the decline in May. This latest decline pushed monthly sales in Alberta to their lowest level since May  ; 2006. It was also the first month since July  ; 2002  ; that the province failed to register an increase in its year-over-year monthly growth.

Sales also decreased for the second straight month in Saskatchewan, down  ; 2.4% to  ; $1.3  ; billion in May, following a  ; 2% decline in April. As was the case in April, lower sales of "other products" (mainly agricultural chemicals) were responsible for most of the drop. Prior to April, sales in the province had risen for five consecutive months.

Sales in the Atlantic Provinces also fell for the second straight month, mostly due to lower sales (-1.8%) in New Brunswick.

Inventories drop for the first time in  ; 2007
Wholesale inventories registered a modest decline in May, down  ; 0.8% to  ; $54.2  ; billion. This ended a string of four consecutive monthly increases and was primarily attributable to significant drops in motor vehicle (-3.5%), "other products" (-3.8%) and building supplies (-1.4%) inventories.

The decrease in motor vehicle inventories was particularly noteworthy, as it brought inventories in this trade group to a level not seen since November  ; 2005. After hitting an all-time high of  ; $5.3  ; billion in February, motor vehicle inventories have dropped by about  ; 15%.


May's drop in inventories, combined with a modest increase in sales, pushed the overall inventory-to-stock ratio from  ; 1.28  ; in April to  ; 1.26  ; in May. Nevertheless, the ratio remains at a relatively high level when compared with the average of the past three years (1.23). The ratio is a key measure of the time, in months, that would be required to exhaust inventories at the current rate of sales.
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Sales by sector here<